TaxBuddy’s Top Tax Saving Options for FY 2025-26
- PRITI SIRDESHMUKH
- Sep 24
- 8 min read
Updated: Sep 29
For FY 2025-26, Indian taxpayers have multiple avenues to reduce their taxable income and maximise refunds. Choosing the right tax-saving investments and deductions can significantly lower your liability under both the old and new tax regimes. Popular provisions like Section 80C, 80D, 80E, NPS contributions, and home loan interest allow taxpayers to save efficiently while complying with the Income Tax Act, 1961. Understanding the nuances of these options and linking them to bank account declarations ensures correct TDS reporting. Platforms like TaxBuddy simplify this process with AI-driven guidance and expert support for effortless tax filing.
Table of Contents
Overview of Tax Regimes for FY 2025-26
For the Financial Year 2025-26, taxpayers can choose between two tax regimes: the Old Tax Regime and the New Tax Regime. The old regime allows taxpayers to claim various deductions and exemptions under sections such as 80C, 80D, and 80E, making it ideal for those who have substantial investments or expenses eligible for deductions. In contrast, the new regime offers lower tax rates but removes most deductions and exemptions, simplifying filing but potentially increasing taxable income for some. Choosing the right regime depends on your financial profile, including your income sources, investments, and expenses. Understanding these regimes is essential to optimize tax savings and avoid unnecessary payments.
Section 80C – Maximize Your Deductions
Section 80C of the Income Tax Act is one of the most widely used provisions by individual taxpayers and Hindu Undivided Families (HUFs) to reduce their taxable income. Under this section, taxpayers can claim deductions of up to ₹1.5 lakh in a financial year on various eligible investments and payments. Some of the common instruments covered under 80C include Life Insurance Premiums, Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC), Equity-Linked Savings Schemes (ELSS), Sukanya Samriddhi Yojana contributions, and tuition fees for children’s education. By investing or paying in these eligible avenues, taxpayers can effectively lower their taxable income, thereby reducing the overall tax liability under the old tax regime. Additionally, proper planning of 80C investments not only provides tax benefits but also helps in long-term wealth creation and financial security. Platforms like TaxBuddy simplify this process by guiding users on which payments and investments qualify for deductions, ensuring that taxpayers maximize their benefits while avoiding errors that could lead to notices or discrepancies during assessment.
Section 80D – Health Insurance Premium Benefits
Section 80D focuses on promoting financial protection against health-related risks by allowing taxpayers to claim deductions for premiums paid towards health insurance policies. Individuals can claim a deduction of up to ₹25,000 per year for insurance coverage of themselves, spouse, and dependent children. In addition, an extra deduction of ₹25,000 is available for premiums paid for parents, which increases to ₹50,000 if the parents are senior citizens. This means that, in certain cases, taxpayers can claim a total deduction of up to ₹75,000 under this section in a single financial year. Section 80D also covers preventive health check-up expenses up to ₹5,000 within the overall limit. Claiming this deduction not only reduces taxable income but also encourages individuals to maintain health insurance for themselves and their families, offering financial security during medical emergencies. Platforms like TaxBuddy further enhance this benefit by automatically factoring eligible premiums while preparing the ITR, ensuring that no deduction is missed and the filing remains error-free.
Section 80E – Education Loan Interest Deduction
Section 80E of the Income Tax Act provides taxpayers with the ability to claim a deduction on the interest paid on loans taken for higher education. This includes loans taken by the individual, their spouse, or their children for pursuing undergraduate, postgraduate, or professional courses in India or abroad. The deduction covers only the interest component of the loan, and there is no upper monetary limit, making it particularly beneficial for students and parents managing long-term education expenses that often involve significant financial outlay. The deduction is available for a period of up to eight years from the year in which the repayment of the loan begins or until the interest is fully paid, whichever is earlier. This extended period ensures that taxpayers can claim relief for a substantial part of their financial commitment toward education. Platforms like TaxBuddy can simplify the process by accurately calculating the eligible interest and ensuring it is correctly reflected in the ITR. This helps avoid mistakes that could lead to notice or scrutiny, making the tax filing process smoother and more reliable.
National Pension System (NPS) – Section 80CCD(1B)
The National Pension System (NPS) is a government-backed retirement savings scheme designed to provide long-term financial security. Under Section 80CCD(1B), taxpayers can claim an additional deduction of up to ₹50,000 on contributions to their NPS Tier-1 account, which is over and above the ₹1.5 lakh limit under Section 80C. This provision enables taxpayers to save more for retirement while simultaneously reducing their taxable income in the old tax regime. Contributions to the NPS Tier-1 account are eligible for deduction each financial year, and the accumulated corpus grows tax-free until withdrawal at retirement, providing a disciplined approach to long-term financial planning. TaxBuddy assists users by guiding them on how to correctly include NPS contributions in their ITR, ensuring the maximum deduction is claimed without errors. By leveraging such tools, taxpayers can optimise their overall tax liability while also securing their retirement savings in a structured and compliant manner.
Home Loan Interest – Section 24(b) Benefits
Section 24(b) allows homeowners to claim a deduction of up to ₹2 lakh per financial year on interest paid on home loans for self-occupied properties. For let-out properties, the entire interest paid can be claimed as a deduction, subject to certain limits. This deduction significantly lowers taxable income and enhances savings. TaxBuddy ensures that home loan interest is correctly reported in the ITR, making the filing process simple and accurate.
Is Tax Saving Allowed in the New Tax Regime?
The new tax regime does not allow most deductions and exemptions, including Sections 80C, 80D, 80E, or home loan interest. Taxpayers opting for the new regime benefit from lower tax rates but cannot reduce taxable income through these traditional avenues. It is essential to evaluate your total investments and deductions before switching to this regime to ensure it is financially advantageous.
How Tax Saving Works in the Old Tax Regime
The old tax regime allows taxpayers to claim deductions and exemptions under various sections, including 80C, 80D, 80E, 24(b), and NPS contributions. By reducing taxable income, these deductions lower the overall tax liability. TaxBuddy helps in identifying eligible deductions, calculating maximum limits, and filing ITR accurately, ensuring that taxpayers maximize their savings while complying with all legal requirements.
Bank Account Opening Forms and Tax Relevance
Certain bank account opening forms, such as Form 15G/15H and PAN-linked accounts, play a crucial role in managing TDS and avoiding unnecessary tax deduction. Declaring correct information during account opening ensures that interest income is appropriately reflected in tax returns, preventing discrepancies and potential notices. TaxBuddy provides guidance on properly completing these forms and tracking interest income to maintain compliance.
TaxBuddy Mobile App – Optimizing Tax Savings
The TaxBuddy mobile app streamlines tax planning and filing by automatically integrating eligible deductions, exemptions, and investment details. The app allows taxpayers to prepare and file ITR efficiently while ensuring maximum tax benefits under the old regime. It also provides reminders for deadlines, calculates potential savings, and validates information to minimize errors, offering a seamless experience for both individuals and professionals.
Conclusion
For taxpayers aiming to maximize deductions and optimize their tax liability, understanding the nuances of the old and new tax regimes is critical. Proper utilization of Sections 80C, 80D, 80E, NPS contributions, and home loan interest can significantly reduce taxable income. For anyone looking for assistance in tax planning and filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted plans. Individuals who prefer a guided interface can use the self-filing option to submit their ITR independently, while those with complex income sources such as business, freelance income, or multiple investments can opt for expert-assisted filing. The expert-assisted plan ensures a tax professional reviews all entries, checks TDS credits, and verifies deductions to minimize errors.
Q2. Which is the best site to file ITR?
The best platform depends on your filing needs. TaxBuddy is highly recommended for both individuals and professionals because it offers AI-driven tax filing, seamless navigation, error-free calculations, and expert-assisted options. Its mobile app simplifies the filing process, tracks refunds, and ensures compliance with the latest ITR regulations.
Q3. Where to file an income tax return?
ITR can be filed on the official Income Tax Department e-filing portal or through trusted platforms like TaxBuddy. Using TaxBuddy ensures that returns are prepared accurately, deductions are optimized, and the filing process is guided, reducing errors and the chances of receiving notices.
Q4. Can deductions under Section 80C and 80D be claimed together?
Yes. Section 80C allows deductions up to ₹1.5 lakh for investments such as PPF, ELSS, or life insurance premiums, while Section 80D allows deductions for health insurance premiums for self, family, and parents. Both deductions can be claimed in the same financial year, ensuring maximum tax savings.
Q5. Is there an upper limit for claiming home loan interest under Section 24(b)?
Yes. Under Section 24(b), interest on a home loan for a self-occupied property can be claimed up to ₹2 lakh per year. For let-out properties, there is no upper limit on interest deduction; however, the total loss under the head “Income from House Property” that can be set off against other income is restricted to ₹2 lakh per year.
Q6. Are NPS contributions eligible in both old and new tax regimes?
Yes, National Pension Scheme (NPS) contributions are eligible for deduction under Section 80CCD(1B) up to ₹50,000 per year, even under the new tax regime. In the old regime, this is in addition to the ₹1.5 lakh limit under Section 80C, allowing further tax benefits.
Q7. How many years can I claim deduction under Section 80E?
Section 80E provides a deduction on interest paid on an education loan for higher studies. This deduction is available for a maximum of 8 years or until the interest is fully paid, whichever is earlier. There is no cap on the amount of interest eligible for deduction.
Q8. Can senior citizens claim higher deductions under Section 80D?
Yes. Senior citizens can claim a higher deduction under Section 80D for health insurance premiums. For self and family, the limit is ₹50,000 (instead of ₹25,000 for non-senior citizens), and an additional ₹50,000 can be claimed for insurance of parents who are senior citizens.
Q9. Does TaxBuddy calculate the optimal tax-saving strategy automatically?
Yes. TaxBuddy’s AI-driven platform analyzes all eligible deductions, TDS credits, and investments to suggest the optimal tax-saving strategy. Users can maximize deductions under Sections 80C, 80D, 80E, and other applicable provisions, ensuring minimum tax liability with accurate compliance.
Q10. What is the penalty for missing ITR filing deadlines?
Missing the ITR filing deadline attracts a penalty under Section 234F. For returns filed after the due date but before December 31, the penalty is ₹5,000. Returns filed after December 31 incur a penalty of ₹10,000. Additionally, interest under Sections 234A/B/C may apply on unpaid tax.
Q11. Can I revise my ITR after filing to include missed deductions?
Yes. Taxpayers can revise their ITR under Section 139(5) if deductions, exemptions, or income were omitted in the original filing. The revised return can be filed before the end of the relevant assessment year or within the prescribed timeframe, allowing correction of missed entries and adjustment of refunds.
Form 15G (for individuals below 60) and 15H (for senior citizens) are self-declarations submitted to banks to prevent TDS on interest income if total taxable income is below the taxable threshold. Filing these forms ensures that no tax is deducted at source on interest from fixed deposits, savings accounts, or recurring deposits.
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